Culture Trumps Strategy at Citi

One of the most interesting lessons from the Citibank debacle and recent firing of CEO Charles Prince is the importance of culture as a make-or-break factor in business success. As noted in this WSJ cover story, Prince and his leadership team were never able to unite the disparate fiefdoms in the sprawling Citibank empire, and as a result could not hope to achieve the strategic goal of providing a one-stop shop of financial services. The article mentions defiant Citigroup bond traders still answering their phones as “Salomon” years after the brand was ostensibly retired, and also highlights the dysfunctional and even antagonistic relationship between the various business segments and brands. It’s interesting to note that Citi apparently put considerable energy behind an internal branding campaign promoting “One Citi”, but as in many similar exercises this apparently was more an empty (and aspirational) slogan than a robust, change management effort. By all accounts there was no such thing as a coherent Citi culture, so there was nothing cultivated to replace the various cultures left over from the Travellers & Citibank merger. Companies that seek to promote a unified culture need to remember a few golden rules:

– You can’t artifically create a culture out of a vacuum, but should rather build on existing norms and values

– Employees need an incentive to embrace or support a culture, with clear “benefits of membership” rather than just platitudes

– Talk and slogans are often not enough to encourage alignment and drive cultural change – usually the effort must include personal incentives (or “sticks”) to change behaviors, structural and strategic adjustments, new orientation and training programs, and so on

– Much like consumers shape the external brand through their perceptions and opinions, employees ultimately own the corporate identity

The ultimate lesson is that any CEO trying to impose or promote a culture without considerable due diligence and follow-through is doomed to failure. Yet another reminder that a strategy is nothing without people.